Freeze Frame : Launch of Digital Videodiscs Is Marred by Fears of Piracy
When two warring electronics industry factions reached agreement last year on a single technical standard for the next-generation consumer electronics technology known as the digital videodisc, there were high hopes that the new machines would be the hottest product around this Christmas.
DVD promised to challenge the videocassette recorder by offering disc-based movies with video and sound quality far superior to the VCR. The discs, which resemble traditional compact discs but can store 10 times more information, could also be used for music and for increasingly popular multimedia computer programs.
But the launch has been marred by infighting among the many companies involved, and some fear the technology’s future could be seriously compromised by the lack of an agreement on how to prevent illegal copying of DVD movies.
Considerable progress has been made on a data encryption standard to prevent casual copying of discs by consumers. Warren Lieberfarb, head of Warner Home video and a leader of the DVD effort, said he is optimistic that an agreement on this standard will be approved by electronics and movie industry representatives in about two weeks--an agreement that would allow production of movie discs to begin.
But no technological solution is yet in sight for what Hollywood regards as a far more dangerous problem: large-scale commercial piracy in China and other countries, which has now become common with music CDs.
The encryption standard that will be used for the first DVD products “is good enough to stop the casual home copier from duping down to VHS and giving it away to his friends,” said Tom Adams, an industry analyst based in Carmel Valley. “But it’s a ‘single-key’ encryption, and once a pirate breaks the key, he’s off and running. It’s not enough to stop the professional pirate.”
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Despite this problem, Matsushita Electric Industrial Co. and Toshiba Corp. both have announced they will start selling DVD video players in Japan Nov. 1 at prices ranging from $700 to $870. Both firms, and perhaps several others, hope to be selling in the United States by early December. Sony Corp., which holds some of the key patents for the new technology, says it won’t sell machines anywhere until next spring.
But the prolonged uncertainty over copyright protection has meant that movie studios and other potential manufacturers of discs for DVD players have yet to gear up production. Consumers who take the plunge and buy DVD players for Christmas this year thus may find there is precious little software to play on them. And they could face a very long wait before really great films show up on DVD.
“You’ve got to solve the piracy problem before anyone will commit truly important titles,” said a movie industry official who spoke on condition of anonymity. Others in Hollywood, though, believe that piracy is all but insoluble and studios ultimately will just have to take their chances.
Whether consumers will prove willing to plunk down the $600 to $900 that a DVD video player is likely to cost at the initial U.S. roll-out will depend on the quality of available movies more than the quantity, predicted David Benda, a technology analyst at BZW Securities (Japan) Ltd.
“It doesn’t really matter whether you have 100 films or 1,000 films [available in DVD format],” Benda said. “It matters whether you have hits.”
Toshiba predicts industrywide global sales in 2000 of 120 million DVD devices: 20 million video players, 20 million audio players, 72 million DVD-ROM drives, which are expected to gradually displace CD-ROM drives on personal computers, and 8 million DVD-RAM drives, which would enable computers not only to read discs but also to record information on them.
While the technology to build DVD video players with recording capability should be ready within two years, concerns over cost, size and copyright protection are expected to keep them out of stores until sometime early in the 21st century. Until then, people who want to record movies or other programs off a television set will need to hang on to their old videocassette recorder even if they buy a DVD video player.
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Movie studios and some computer software makers are expected to routinely use encryption to protect against copying. Without such protection, films or other material could be easily copied without loss of quality--unlike videotapes, where repeated copying leads to degradation.
An encryption proposal based largely on Matsushita technology has been presented by the DVD consortium to the U.S. movie and computer industries, and approval seems likely. But many industry officials say that a technical solution alone won’t be enough to satisfy movie studios’ concerns.
Sakon Nagasaki, director of Matsushita’s DVD Business Planning Office, said laws will need to be passed in the United States, Japan and elsewhere banning the production of DVD equipment designed to copy the material contained on coded digital videodiscs.
There is a theoretical risk that a stronger encryption method designed to thwart commercial copiers could be developed and adopted in the future, thereby rendering early DVD players unable to play discs coded with the more advanced technology.
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Sony says its decision to hold off on its DVD launch until spring was prompted mainly by delay in reaching an agreement between the DVD consortium and the U.S. film and computer industries over encryption technology.
Sony spokeswoman Mika Ishida said it would in any case take several years for DVD video players to catch on in a big way.
“The CD was introduced in 1982, but it wasn’t until 1984 that it really took off,” she said. “DVD in my estimation will be the same. It will not be an instant hit. I think a lot of people underestimate how long it takes a market to develop.”
Benda, the Tokyo-based technology analyst, agreed that if there is going to be a “DVD Christmas,” it won’t be this year.
“If there is going to be one, it will be next year,” he predicted. “The most ideal situation for the consumer is that it doesn’t sell so well this year, and prices fall next year to $350 to $650. Then I think it may become a hot-selling item, because the software houses will wake up to it--and you can press discs in about 24 hours.”
